Time Is Running Out To Shelter Capital Gains

With only two weeks left in the year, investors, advisors, CPA’s, and tax and estate planners are working on year-end tax evaluation scenarios to help defer or even eliminate capital gains taxes as best as possible. Looking back at opportunity zone investing over the last five years—when the industry was first established—I think it’s now safe to say that investing in Qualified Opportunity Zone Funds (QOFs) is proving to be an attractive alternative asset class for sheltering capital gains. A key feature of QOFs is that capital gains, regardless of where they come from, can be reinvested into real estate projects or an operating business within a designated opportunity zone, as long as the project or business meets certain requirements.

As time is running short to analyze and sift through the roughly 8,700 opportunity zones available to invest in, Belpointe PREP, LLC (NYSE: American “OZ”) is still the only QOF traded on a national securities exchange as a public real estate partnership structure. In our view, this greatly simplifies the process for all categories of investors, and for those advising investors alike. I talk about this aspect along with other features of Belpointe PREP, LLC (“Belpointe OZ”) in a recent webinar hosted by Wealth Management Magazine, and featuring Belpointe OZ’s CEO Brandon Lacoff (which you can access here). The webinar lays out many of the virtues and challenges of investing in QOFs, and I think it should help readers better understand some of the features that are a big part of the industry. To watch the full event, please click here.

According to a recent report published by accounting and consulting firm Novogradac^®, QOFs have raised in excess of $30 billion since their inception and are on pace to raise more than $10 billion in 2022, which, according to Novogradac, would mark the biggest fundraising year for QOFs yet. However, Novogradac estimates that total investments in QOFs is likely 3-4 times higher than what it is capturing because it sources its data from voluntary disclosures and public sources. If Novogradac estimates are correct, that would put the overall size of the OZ industry in excess of $100 billion.

There are some features that are common to all QOFs, and some that are unique to Belpointe OZ, which I have included in bold type:

QOFs provide for pass-through income, thereby avoiding double taxation for investors;
QOFs provide for pass-through depreciation, with no depreciation recapture if an investment is held for 10 years, up to December 31, 2047;
QOFs require annual distributions of at least 90% of taxable income;
QOFs provide for up to a 20% reduction on taxable distributions via Internal Revenue Code Section 199A;
Belpointe OZ provides for asset diversification;
Belpointe OZ provides investors with greater control over their exit timing and amount;
Belpointe OZ offers low minimums for investor access;
Belpointe OZ unitholders will not be asked to add additional capital for any type of improvements or problems with investment properties;
Belpointe OZ provides investors with better reporting, transparency, and oversight;
Belpointe OZ provides investors with the opportunity for daily liquidity;
Belpointe OZ allows both accredited and non-accredited investors to access the investment class; and
Belpointe OZ simplifies the investment purchase process.

Belpointe OZ is building and acquiring multi-family residential properties that fall into the Class-A, full-featured category, in markets that our research shows are experiencing growth both in terms of migration trends and employment opportunities. Belpointe OZ is already committed to several investments in Nashville, Tennessee, and the state of Florida. In fact, Belpointe OZ announced just this past week that it has completed the acquisition of a new development site in Nashville, Tennessee, for an aggregate purchase price of $16.2 million, exclusive of transaction costs. The approximately 5.92-acre site is located within an opportunity zone on the riverfront in East Nashville, Tennessee. This marks Belpointe OZ’s fifth investment in Nashville.

Further, in its effort to disrupt the U.S. real estate industry, Belpointe OZ is charging among the lowest fees in the market:

No investors servicing fees;
No disposition fees;
75% annual management fee; and
5% carried interest.

If you wish to learn more, call me today and I’ll take the time to answer your questions about Belpointe OZ and how reinvesting capital gains into a QOF can be utilized to offset capital gains tax obligations. My direct phone number is (203) 883-1944.

Belpointe OZ is backed by the in-house real estate and construction expertise of the Belpointe Real Estate Group. Our management team has extensive experience in building, acquiring and disposing of multifamily rental properties.

Let me re-emphasize that, from a tax planning perspective, while other QOFs have limited or restrictive redemption features, Belpointe OZ Class A unitholders can buy and sell Class A units in the open market to adjust their tax deferral strategy. Investors who have realized capital gains in any variety of assets in the past six months, whether from the sale of real estate, stocks, bonds, mutual funds, a business, collectibles, planes, boats, livestock, cryptocurrencies, precious metals, an interest in a partnership, etc., may want to consider reinvesting those capital gains into a QOF, such as Belpointe OZ, deferring tax on those capital gains until December 31, 2026 (as long as you continue to holder the investment) and with the potential of generating income and capital appreciation, most or all of which can be tax free.

This four-plus-year tax deferment opportunity might serve as an alternative strategy for your 2022 year-end tax planning purposes. For example, if we apply the 180-day look-back period, capital gains realized as far back as the third week of June of this year qualify for 2022 tax deferment. But that 2022 deferment window narrows with each passing day. It is important to act quickly as the 2022 clock for deferring capital gains taxes is ticking.

We spell out how this alternative can work for you in our updated white paper. Follow this link to request the our Publicly Traded Opportunity Zone Investing White Paper.

Have questions about how Belpointe OZ (NYSE American: “OZ”) can provide opportunities for investment appreciation and income and help you or your clients to defer or eliminate capital gains tax obligations?

Call me, Cody Laidlaw, at (203) 883-1944. I can answer your questions and direct you to resources that will provide you with information about the nuts and bolts of QOFs and opportunity zone investing, so you can start planning today.

You can also follow this link here to request our updated White Paper.

Cody H. Laidlaw
Editor-in-Chief
Belpointe OZ
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
E: IR@belpointeoz.com

Disclosure: Cody H. Laidlaw is the Chief Investor Relations Officer. Cody is also an investment advisor representative with Seaside Advisory Services, Inc. (d/b/a Seaside Financial & Insurance Services), a SEC registered investment adviser offering advisory accounts and services, and holds a long position in Belpointe PREP, LLC’s Class A units.

Important Information and Qualifications

Belpointe PREP, LLC (“Belpointe PREP”) has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offer and sale of up to $750,000,000 of Class A units representing limited liability interests in Belpointe PREP. You should read Belpointe PREP’s most recent prospectus and the other documents that it has filed with the SEC for more complete information about Belpointe PREP and the offering

Investing in Belpointe PREP’s Class A units involves a high degree of risk, including a complete loss of investment. Prior to making an investment decision, you should carefully consider Belpointe PREP’s investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in Belpointe PREP’s Class A units. To view Belpointe PREP’s most recent prospectus containing this and other important information visit sec.gov or belpointeoz.com. Alternatively, you may request Belpointe PREP send you the prospectus by calling (203) 883-1944 or emailing claidlaw@belpointe.com. Read the prospectus in its entirety before making an investment decision.

This communication, including any links embedded herein, may not be distributed in any jurisdiction where it is unlawful to do so. Nothing in this communication is or should be construed as an offer to sell or solicitation of an offer to buy Belpointe PREP’s Class A units in any jurisdiction where it is unlawful to do so.

Neither Belpointe PREP nor any of its affiliates provide investment or tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should consult their own investment and tax advisers concerning the U.S. federal, state and local income tax consequences, as well as any tax consequences under the laws of any other taxing jurisdiction, in relation to their personal tax circumstances, which may vary for prospective investors in different tax situations.

This communication may contain estimates, projections and other forward-looking statements, typically identified by words and phrases such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of such words and other comparable terminology. However, the absence of these words does not mean that a statement is not forward-looking. Any forward-looking statements expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future events and involve risks, uncertainties and other factors beyond Belpointe PREP’s control. Therefore, we caution you against relying on any of these forward-looking statements. Actual outcomes and results may differ materially from what is expressed in any forward-looking statement. Except as required by applicable law, including federal securities laws, Belpointe PREP does not intend to update any of the forward-looking statements to conform them to actual results or revised expectations.

Tax Deadline Fast Approaching

Time Is Running Out To Shelter Capital Gains

IRS-Approved 1031 Like-Kind Exchange Alternative

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